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Choice State's Utility Business Model Reform Report Raises Issues Of Central State Default Service Procurement, Re-Regulation
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A report prepared by a consultant retained by the New Jersey BPU in a proceeding to modernize and potentially reform the state’s electric distribution utility business model has raised issues concerning default service, and re-regulation, in citing supply-related affordability concerns, though the report recommends consideration of such supply-related issues in separate analyses and proceedings
The report states, "Supply-side questions, including whether the BGS [electric basic generation service] procurement structure provides sufficient hedging
and how longer-term or state procurement would interact with PJM markets and transmission costs,
which are set by FERC through PJM’s tariff, raise ... jurisdictional, market, and legal
considerations."
"These [supply-side questions] are best pursued alongside, but analytically separate from, distribution
business model reform, so that the distinct levers and the limits of NJBPU authority over each remain
clear," the report states
The report states, "Supply costs have been a major driver of recent bill increases, but they are largely shaped by PJM
wholesale markets and the BGS procurement structure."
The report specifically cites as potential options, with respect to potential supply-related reforms, "EDC participation in
PJM markets, central state procurement, or re-regulation of generation[.]"
However, the report notes that these potential modifications, "would be major structural
changes requiring separate legal, market, and FERC/PJM analysis."
"They should be considered in
parallel with affordability workstreams and are outside the scope of this study," the report states
The report recommends, for consideration in a separate proceeding, a quantitative analysis of supply issues that would include consideration of a BGS hedging assessment, supply volatility
options, and a risk allocation analysis
The report also notes that certain distribution-related reforms may decrease supply prices
"Load management, demand response, managed electric vehicle (EV) charging, virtual power plants
(VPPs), DER programs, and rate design can reduce peak demand, improve system utilization, and
potentially reduce exposure to capacity, transmission, or local distribution upgrades. These
strategies should be evaluated as potential affordability tools," the report states
Docket EO26040117
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July 17, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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